NO FRETTING AT FIRSTENERGY OVER PLANNED UNICOM/PECO MERGER

The proposed merger of Chicago-based Unicom Corp. and Philadelphia Electric Co. may foreshadow things to come in the electric business, but FirstEnergy Corp. professes not to be intimidated by the planned creation of a power-generating monolith.
'We know that we will have many competitors, not just Unicom and PECO, but our future depends on what we do, not what other companies do,' said FirstEnergy spokesman Ralph DiNicola. 'We want to be in the generation business, and we feel we have diversified our company to be competitive in not only the electric market, but in natural gas, distribution, transmission and energy- related services.'
Mr. DiNicola's defiant words come amid speculation by some electric industry observers that a combined Unicom-Philadelphia Electric will be less interested in competing against other companies as it will in gobbling up the generation plants of other nearby utilities, such as Akron-based FirstEnergy.
'It (the Midwest) will be a very interesting and vibrant market, perhaps the most competitive in the country,' said Linda Byus, utility analyst for New York brokerage Dredzner Kleinwort Benson. 'PECO already has been buying up power plants across the country, and deregulation nationwide will undoubtedly create some companies that are interested in generation and some that aren't.'
Across the country, a handful of utilities have chosen to pursue a niche as power generators in states where customers have been given the ability to choose their electric suppliers. Unicom and Philadelphia Electric are chief among them, with the Chicago utility selling off about 20 high-cost fossil generating plants to focus its generation capability in 10 nuclear plants in five states, and Philadelphia Electric scouring the country to buy up generation stations.
'It is safe to say that we are always looking at the idea of increasing our generation capabilities,' said Adrienne Levatino, communications director for Unicom and Commonwealth Edi
son Corp., its electric subsidiary.
The proposed merger of Unicom and Philadelphia Electric would create the country's largest generator of electricity. It could pose formidable competition to FirstEnergy, which by January 2001 will be looking to sell the power it generates in a deregulated electric market in Ohio and in other states, too.
Even so, Daniel Poole, utilities analyst for NatCity Investments Inc., the investment arm of National City Corp., said he doesn't believe the planned combination of the Chicago and Philadelphia electric giants will put the squeeze on FirstEnergy, at least in the short term.
'This merger is a massive undertaking,' Mr. Poole said. 'It could take a year to 18 months to complete, and by then the landscape will have changed completely.'
Longer term, FirstEnergy and its four smoothly functioning nuclear generation units could become acquisition targets for the Unicom/Philadelphia Electric conglomerate, Mr. Poole said. But Mr. Poole also noted that the Akron utility has diversified into other fields and will pose stiff competition.
'FirstEnergy is a large company itself, and depending on what the market looks like, could be very viable,' Mr. Poole said.
FirstEnergy's Mr. DiNicola expressed a similar view.
'We already compete with these two companies in other markets,' Mr. DiNicola said. 'Down the line, we don't know what happens, but just because somebody looks at a map and points out that we are in between two large companies doesn't mean we can't compete.'